The Hindu Business Line : India Cements posts Rs 5.85-cr net in Q2; plans VRS

INDIA Cements Ltd has posted a net profit of Rs 5.85 crore on sales of Rs 466.52 crore for the quarter ended September 30, 2005 compared to a loss of Rs 17.73 crore on sales of Rs 357.25 crore for the same period last year.

In the first six months of this year, the company posted a net profit of Rs 11.06 crore on sales of Rs 918.61 crore against a loss of Rs 35.83 crore on sales of Rs 669.39 crore for the corresponding period last year.

In a press release, India Cements attributed the turnaround to growth in clinker and cement sales and a partial recovery in cement prices. The buoyancy in cement demand continued with an all-India growth of 10.3 per cent during the first half while the demand in the South, the company's main market, grew at 20 per cent in this period.

The company produced 29.81 lakh tonnes of clinker, up 15.5 per cent over the 25.81 lakh tonnes it produced in the first half of 2004-05, while cement production grew 39 per cent to 36.02 lakh tonnes from 25.98 lakh tonnes previously.

Plans VRS: Officials said the company would come out with a voluntary retirement scheme for its employees. The company hoped to reduce its number of employees by at least 500 through the scheme.

It has on its rolls 3,500 employees now.

In October, India Cements raised Rs 497 crore through an issue of global depository shares (GDS). This would increase its present equity base of Rs 139.50 crore by Rs 51.20 crore.

A substantial part of the money raised through the GDS issue - about Rs 400 crore - would be used to repay existing high-cost debt. The company had earlier in this calendar year raised Rs 110 crore through a preferential issue, which was also used to retire high-cost debt.

When contacted, Mr N. Srinivasan, Vice-Chairman and Managing Director, India Cements, said the company was ahead on its obligation to repay at least 50 per cent of its original debt of Rs 1,800 crore by March 2006.

Apart from preferential allotment and the GDS issue, the company had brought in fresh money through a loan from HUDCO, he said. The company was also in talks with its other lenders to reduce the interest rate.

According to company officials, its total debt at the beginning of this financial year stood at Rs 1,987 crore and accumulated losses as at March 31, 2005 at Rs 307 crore.

With stable cement prices and a positive outlook for the industry, the company is optimistic about its performance.

India Cements' shares closed at Rs 96.50 on the NSE today against Tuesday's closing price of Rs 97.75.

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